Investment Q&A

Q: Hi 5i Team,

What is a good heuristic to use for a diversified portfolio with respect to the percentage allocation for the largest equity holding? For example, the Berkshire Hathaway portfolio has a portfolio weighting of more than 41% invested in AAPL. This represents a significant overweighting of one stock in comparison to the weighting of AAPL in the S&P 500 Index and Nasdaq 100 Index, which hold 6.1% and 10.9% in AAPL, respectively.

If one has a very strong belief in the superior expected returns of a company or ETF, for example, AAPL or QQQ, what is the upper percentage allocation one should assign for your largest equity holding? Is it 10%, 15%, 20%, 25%, 30%, 35% or 40%? What rule of thumb is reasonable for a well-diversified portfolio.

Your comments on the above is much appreciated.

Thanks George

Q: Hi 5i, my question is on asset allocation and I know this is a personal question. That said, I'm getting older and capital preservation is even more important to me now. I'm thinking 6% gold, 15% cash, 10% REITs, 15% fixed income (including preferred shares), and the rest (54%) in stocks throughout the world but mostly North American based. Is this reasonable for someone that's getting older? and am I missing any asset classes.
Thanks

Q: Greetings, I have about 12-15% of my portfolio in cash. I am hoping to utilize it on opportunities during a correction or downturn. Would it make sense to invest in a conservative ETF until such time? Any low risk recommendations , instead of just cash, HSA and GICs?

Q: hi guys i was wondering what, if any residual effect the situation in china would affect our banks if the real estate firm is not bailed out and i guess how would it affect our economy in general. thanks as always

Q: Long term bond prices rose during previous tapering periods (following 2014 QE for example). Given this, and the relative certainty tapering is coming soon, would now be a good time to add to one's long and short term bond holdings? If I'm incorrect, please explain why? Thank you, great service.

Q: If the market keeps falling for a bit is there anything particularly attractive? Can you try as best as possible to consider the effects of the Evergrande (potential) collapse all the while presuming that economic fallout will be mostly contained? In other words if new construction in China slows and it has some effect on mining and iron ore prices (for example) what is not effected or what kinds of companies and in which sectors will actually benefit? Or am I just overthinking developments that have too many moving parts to really make sense of? Thank-you.

Q: Hi 5i,

Will the China Evergrande Group crisis will be causing the US and Canada market in big problem? If there is any, which sectors will have most affected. Many thanks.

Q: I see the indexes rising inexorably while much of what I follow and should otherwise be supported by emerging policy wallows, from which I conclude that the market is very narrow - that those doing well and driving the indexes are a small portion of the whole. That is very frustrating especially when the outperformers role/function is not clear. Do you think you could address this? From my point of view the indexes simply do not represent the majority of investment sentiment.

Q: Hi 5iresearch team

On a scale of 1 to 10, 10 being certainly, how likely do you think a stagflation scenario will happen in the US economy?

Second question, what types of investment will likely win in stagflation (gold, certain stocks, bonds, real estate, cash … etc)?

Third question: can you recommend 3 Cdn and 3 US stocks that you think will do well in stagflation? Can you please rank them if possible?

Thank you for your great service, I really enjoy reading your answers everyday in the Q&A section.

Q: I am trying to grow a small position in GDI and have two options. As I add funds over the coming months I can just average in, or I could sell my position in QIPT and get a larger position right away.

I know the stocks aren't comparable, but what would your thoughts be on this move? I think QIPT has decent growth prospects but one thing this move would do is take remove some risk (from small-cap to GDI market cap over 1 billion. Thanks for your thoughts.

Q: Owning stocks is by nature an intangible asset. In the event, of lets say, a black swan event such as a cyber threat world wide and all our intangible assets are basically in digital form (as opposed to physical and tangible) what, if anything can an individual owning stocks do, if anything, to make that asset more tangible? I assume the stocks in all your model portfolios have been suggested because of they have been deemed higher rated companies, those more likely to survive any temporary stock market crash. But can we make owning them more tangible or are we fully at the mercy of the Internet?

Q: If you had to pick only ten stocks or ETF's to hold forever which would they be?
Thanks

Q: Please advise 5 top defensive growth stocks - Canada, US or global.
Many thanks for your advice.

Q: Hi 5i!

I try to diversify well my portfolio between sectors but i never paid much attention to allocation between the size of companies. It probably explain the weakness in my portfolio this year, too much invested into small caps.

How would you split your porfolio in % between small, medium and large caps?

I mostly use growth potfolio with some stocks from the balanced porfolio and some us stocks.

Many thanks

Q: I have a non-registered account which is invested in roughly equal weights of 13 Canadian blue chip dividend payers (NTR, RY, BNS, TCL.A, T, BCE, SLF, QSR, ENB, FTS, LNF, BEPC, AQN) and CPD. I am in the process of re-organizing it a bit and have some additional cash to invest.

I have tinkered with SYZ, FSZ and LIF in this account and none of these quite fit the profile I'm going for (steady eddies thru next economic cycle, decent and reliable dividend).

Over the last year or so, I have been tweaking this account to get it to the point where it will be very low (or no) maintenance. Game plan is to drip for another few years, then start to take the dividend in cash to live off. Capital preservation and dividend reliability are obviously key.

Looking for some guidance on choosing 2 or 3 additional holdings from the following list:
EIF (nice div, needed industrial exposure)
AW.UN or ZRE (are these OK in an open account?)
CVD or XHY (some fixed income to smooth out any upcoming lumps) or other fixed income idea.

Do CPD, CVD, XHY make sense now with tapering about to begin in the US?
All comments about this strategy and my stock selections are most welcome.

Several questions here - please take several credits


Thanks in advance,

Jim

Q: What eft or fund would you recommend for upside in case of Black Swan event. Is there any etf that mimics Mark Spitznagel’s $4.3 billion Universa Investment fund. Any thought on Kim Bolton's Black Swan tech fund?

Q: We are often reminded that one should not try to time the market, and that it is time in the market that counts. But would you be in favour of an investor re-weighting to more defensive positions if one is worried there is a "correction" on the horizon, for example if the Delta variant explodes Covid numbers, there is a gov't policy or interest rate change, an external shock with China, etc, ? If one was going to make that change, can you pls provide 10 names that currently would be more defensive? Thank you for your very excellent service.

Q: With Tapering now on the doorstep, where do you see short term bond prices going? Is there any scenario where ZCS and/or XSB might actually rise? Thanks.

Q: Hello 5i,
Thank you for your great service! The new HDIV ETF mentioned in the ETF &MUTUAL FUND UPDATE seems to fit in to my value oriented portfolio (albeit with some growth stocks LSPD and LEON'S). Is it a good idea to get in on the ground floor or wait a year to see how it does. Mouth is drooling at 8.5% not seen for many years on a quality position.
Stanley

Q: In response to yesterdays "tapering" report, if one is looking to add liquidity in order to take advantage of a resulting market dip, would you consider selling existing positions that have done well in the recent market growth with the intention of buying back in at a low point? I know you often advise against trying to time the market but this seems like one of the few scenarios where it could be in ones interest?

Or would I simply be better off to leave my current positions alone (everything is slated for long term holds) and try to put aside as much cash as possible in the meantime while we wait for the opportunity to buy?

Thanks